Medicare Supplement/Gap Vs Final Expense

[JoshC]

If we want to talk large FE premiums then let's use large Med Supp premiums as well.

The average FE premium is more like $600-800 so perhaps $1,000 commission. Most supps will pay close at least $2,000 over 6 years.

I've received $400+ per year on supps which is more like $2,500 commission.

There is no doubt that if you look at the total commission supps pay better than FE on average. And a number of my carriers pay forever. I'm still getting $300/yr on policies written 10+ years ago.

I just did the math. Is that remedial enough for you?

Rick

Of course, you do have to add in the small renewal commissions you get from FE. Most companies pay about 150% at street in the first six years. Most of the carriers pay 22% for med supps in my state, or 132% commission in six years. Of course, the average premium is typically much higher on med supps so in terms of dollars the med supp wins handily.

 

[WinoBlues]

Of course, you do have to add in the small renewal commissions you get from FE. Most companies pay about 150% at street in the first six years. Most of the carriers pay 22% for med supps in my state, or 132% commission in six years. Of course, the average premium is typically much higher on med supps so in terms of dollars the med supp wins handily.

How about lapse ratio?

First year and renewals

 

[GreenSky]

How about lapse ratio?

First year and renewals

Almost non-existent for Med Supps. I rarely lose a client other than death. I move them to other carriers but that always is a good thing.

I can't speak to FE but since that's your specialty you should know.

Rick

 

[SPUR CITY]

The time value of money should also factor into the equation. A dollar today is worth more than a dollar tomorrow.


If you receive more $ today and invest wisely that can play a part into this debate

 

[John Galt]

One of the guys that do FE and Medicare would make a great interview. One of the phone / Internet guys would be great as well.

I agree wholeheartedly and its coming.

 

[Thad.Sipple]

How about lapse ratio? First year and renewals

Bingo, placement (meaning they make the first payment), persistency, and lapse ratio is 95% or better with MS.

FE placement / 3 month persistency is 60% +/-

FE 13 month persistency is 75% +/-

I am speaking averages and I'm sure all this can be argued 5% here or there.

We all know why FE is the biggest recruiter out there...... it's the spread. MS there is almost zero spread.

So it's easy to sugar coat the real FE numbers.

 

[John Galt]

Is some situations it might be close, but I believe a Medicare supplement will almost always be more after paying out for 6 years.

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^^
That's more along the lines of the math I was doing.

I can see both points but dont think you wont be replaced on your medsupps too. There are "replacement artist" in every segment lol. So having a medsupp client 6 years is not definite, unless they get too sick to switch, but i dont know crap about supps lol

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How about lapse ratio?

First year and renewals

Now you're just being mean lol

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The time value of money should also factor into the equation. A dollar today is worth more than a dollar tomorrow.


If you receive more $ today and invest wisely that can play a part into this debate

Yep i want my money now not in 72 months.

 

[Cenla Agent]

Looking at these two avenues, what are the pros and cons of both? Is one a better long term pursuit then the other? Seems as though their is more of a residual income type concept to Medicare Supp/Gap over FE. FE is more money up front it seems, but is Medicare Supp/Gap more "stable" long term?
Any thoughts on the wiser pursuit? Is one easier than the other?

As JD and some others noted, there are other things to consider. If you don't like what you're doing, it might not make that much difference whether or not there is the potential to earn more long term one way or another.

What kind of areas do you want to work? In some major metro areas (and some not so major) with long established MA plans, you are basically banging your head against the wall trying to sell supps. (Even with high net worth clients, a supp can be a hard sell when they have an MA in the area with practically every doctor and facility in the network.) In my experience, the Medigap market is more rural. The premiums are usually cheaper and the MA plans in the area (if there are any at all) are not nearly as good.

What kind of people do you want to work with? Annuities and LTC can be good cross-sells with Supps because you are often dealing with people who have more $$. If you are ok with dealing with cat piss, roaches running up your leg, the occasional rodent scurrying out from under the couch and so on, then FE/MA might be the way to go.

I wonder if anyone has ever cross sold FE (or MA) and pest control service? Or much more realistically, has anyone ever shared leads/referrals with a pest control operator or salesman? Years ago I worked for a pest control company. A few years later I got into insurance. I know I ended up with appointments for FE with some of those folks and I'm pretty sure I had a few with MA as well. But in some cases those are bad pest control customers because they won't do anything until the roaches are literally jumping out of the walls. And then they cancel once you get rid of them after a month or two. (PC is typically sold on an annual agreement unless the people are willing to pay a lot up front, which ain't happenin with most of them.) Some of those "cat piss" types are better options for debit companies. "Come get the cash on the 3rd before Junior drinks it up, smokes it up or whatever."

 

[Bcrane0305]

Bingo, placement (meaning they make the first payment), persistency, and lapse ratio is 95% or better with MS.

FE placement / 3 month persistency is 60% +/-

FE 13 month persistency is 75% +/-

I am speaking averages and I'm sure all this can be argued 5% here or there.

We all know why FE is the biggest recruiter out there...... it's the spread. MS there is almost zero spread.

So it's easy to sugar coat the real FE numbers.

Placement rates and 1 time payments are a serious problem in final expense .# agent killer.# torture. After that 2nd month payment it is a good sign. ( from my limited experience). Is that 75 percent you are referring to months 4-12?

 

[Gooner]

Placement rates and 1 time payments are a serious problem in final expense .# agent killer.# torture. After that 2nd month payment it is a good sign. ( from my limited experience) do you guys lose 40 percent of your written business before 3rd month? Sounds kinda high. 20 percent non placement? 20 percent cancellatio/lapse 1-3 and then 75 percent months 4-12? Is that what you mean. Thanks

I think Thad was being dramatic...no way 3 month placement/persistency in 60%...unless he's speaking of his telesales experience.